Now, here's the scoop on cat poop. EPA brochures and a variety of other publications say you can flush it down the toilet, minus the litter. However, research suggests that the eggs of Toxoplasma gondii, a parasite found in cat poop, may survive the wastewater treatment process and contaminate waterways. While Toxoplasma rarely affects healthy people, it can cause defects and brain damage in babies whose mothers were exposed when pregnant. Brain disease can also develop in people with compromised immune systems. In addition, Toxoplasma has been shown to harm sea otters and may affect other wildlife as well. As the eggs can last for up to a year in soil, burying cat poop is also problematic. For this reason, researchers working in the field recommend keeping cats indoors and disposing of waste and litter in the trash in sealed plastic bags.
—Sheryl Eisenberg
http://www.nrdc.org/thisgreenlife/0801.asp